Connect with us

Hi, what are you looking for?

Top News

After the US knockout, Hungary competes with Moscow

After the US knockout, Hungary competes with Moscow

the National taxes and customs (NAV) and Ministry of Finance The Prime Minister explained in a joint decision a few days ago that Russia suspended it on August 8 The effective bilateral agreement signed with Hungary on the 21st of 1999. It was issued by law Tax treaty 5-22. 24, after which it applies its own internal rules to taxation of income and assets from transactions between the Russian and Hungarian parties.

As a result, the scope of the agreement does not cease, but at the same time, the Russian side does not fulfill its obligations arising from the provisions affected by the suspension. At the same time, it can be said that the Russian suspension may ultimately affect cross-border income for both individuals and companies.

The PM and NAV information raises a number of additional practical questions, which Economx will need to clarify The suspect is Tamas, I contacted the senior tax partner of WTS Klient. First of all, it is important to look at the diplomatic front: similar to the termination of the US agreement, the Russian and American sides have taken unilateral steps to prevent us from implementing the tax agreements, which at the same time ensure:

  • Individuals and companies do not have to pay taxes in both countries,
  • Affected countries can collect the taxes they are entitled to.

It also follows that the lack of agreements negatively affects not only individuals and companies, but also the authorities who intend to collect taxes. The Russian side had already indicated in March that it would suspend tax treaties with unfriendly countries, it did so in August, and from then on it applies its own internal rules for taxing income and wealth generated by Russian-Hungarian transactions.

See also  Josh Kerr defeated Jakob Ingebrigtsen, there are two world champions in the women's pole vault

But why is the Russian situation different from the American situation?

“An important difference in the relationship between the two countries is that while the American agreement will expire in 2024, in the case of the Russian agreement, we are not talking about a termination, but rather a unilateral suspension. At the same time, in the near future, no renewal is expected.” “The Russian agreement until the armed conflict in Ukraine is settled.”

According to Tamas Gianni, another important difference is that Russia has violated the suspension of tax treaties with all unfriendly countries (in addition to the EU countries, this also includes the United States, Japan, New Zealand, Canada, Australia and South Korea). That is, suspending the treaty is a message not only for Hungary.

Meanwhile, the United States is the second largest investor in Hungary, so the Hungarian side is open to concluding a new Hungarian-US tax treaty based on information from the Ministry of Finance. All of this would also provide the opportunity for a new and more modern tax agreement to enter into force in the future.

He did not say that by chance Mihaly Varga After the US-Hungarian Business Council (USHBC) meeting, it seeks to strengthen US-Hungarian tax cooperation, as the consequences of termination of the previous agreement by the US side are unfavorable for both countries. The Minister told the USHBC audience:

The United States is the largest investor in Hungary outside the European Union, and its share of total investment equity is close to 9 percent.

He added that the Hungarian government has so far concluded strategic cooperation agreements with 94 companies, including 14 from the United States. In addition, 1,700 American companies employ about 107,000 people, and the volume of bilateral trade in 2022 increased from 7.1 to 8.3 billion dollars, or 16 percent, which is a record number in bilateral trade.

See also  A huge marsupial has been discovered in Australia

Returning to the Russian issue, according to the information provided by NAV and the Prime Minister, the Russian side will not fulfill its obligations arising from the provisions affected by the suspension during its duration, but Hungary will continue to provide benefits resulting from the Hungarian-Russian income tax treaty, and therefore

  • Restriction of the right to tax,
  • Reduced withholding tax rates,
  • Hungarian privileges to avoid double taxation.

WTS Senior Tax Partner Klient confirmed that the Russian side has not suspended the provisions of the tax treaty on the avoidance of double taxation. “Accordingly, for example, if a person with Hungarian tax residency (tax residency can in many cases differ from citizenship) has income or has assets that are subject to tax by the Russian side in accordance with the provisions of the tax treaty, then this income can That they will be exempt from taxes in Hungary, he added, a tax expert.

Another remaining rule is that if a taxpayer with Hungarian tax residency, for example, receives dividend income from Russia, it is possible to set off the withholding tax in the Russian Federation – in accordance with the withholding tax allowed in the tax treaty – only in respect of the dividend income and to a limit Maximum 10 percent.

The general and technical provisions of the tax treaty that are not affected by the suspension will remain in effect and, as a result, among other things,

  • Disputes arising from dual citizenship (for example, if a person is considered a local tax resident under the internal law of both countries) can be resolved,
  • Conflict resolution that can be initiated,
  • It is also possible to exchange tax information.
See also  According to Binotto, there is no doubt about the resurrection of Mercedes

At the same time, it is certainly bad news from the point of view of the tax expert interviewed by our newspaper that the further application of the tax treaty by Hungary cannot unilaterally lead to the avoidance of double taxation on individual and corporate income. Thus, the Russian suspension may affect cross-border income of both individuals and companies.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Top News

In a harrowing incident that has shaken the community of Lewiston, Maine, a series of shootings on Wednesday evening resulted in a tragic loss...

Top News

President Joe Biden’s abrupt departure from a speech on the U.S. economy at the White House on Monday sent a ripple of speculation and...


A dangerous application appeared in the Apple App Store disguised as a known program. reported the Based on TechCrunch article. Dangerous app in...


Chinese scientists have discovered a little-known type of ore containing a rare earth metal highly sought after for its superconducting properties. The ore, called...

Copyright © 2023 Campus Lately.